A multi-objective nonlinear planning model of biomass power generation for supporting subsidy policies optimization

Abstract Biomass power generation has a great potential for supplementing energy resources and alleviating environmental pollutions in rural areas, nevertheless, the current industrial subsidy policies are faced with impediments from incomprehensive environmental value, unbalanced industrial chain distribution and huge financial pressure, etc. Optimization of biomass power generation subsidy policies is significant to make up for multiple positive externalities and promote the stable development of biomass power generation industry. In order to research on the optimization of China’s biomass power generation subsidy policies and establish a whole-industrial-chain multi-objective nonlinear model, three subsidy combinations have been explored to seek the optimal solution to maximize environmental benefit for the public and economic profit for companies, as well as minimize the cost for government subsidies. A case study of an Inner Mongolian biomass power plant was used to find the optimal solution and the corresponding target values in order to prove the effectiveness of the model. Study shows that, through adjusting subsidy processes, methods and amount, the application of biomass power generation subsidy model is able to achieve a win–win situation for both environmental benefit and economic profit without creating extra financial burden for the government. Besides the widely implemented feed-in tariff scenario, feedstock acquisition and access charge subsidy should draw more attention.